Fresh blows for Noble Group as it defaults on debt payments

The beleaguered commodities trader had been grappling with repeated blows for the past three years, after Iceberg Research issued strong criticisms of the company’s balance sheet, combined with a long-running commodity slump.

Noble Group defaulted on a $394 million bond that had matured this week. This promptly led to S&P Global Ratings cutting Noble Group’s long-term credit rating to D from CC on Tuesday.

“We lowered the ratings because Noble has missed the principal and coupon payment for its 2018 notes due 20 March. Noble also missed the coupon payment on its 2022 notes due 9 March,” said analysts at S&P Global Ratings. “In addition, the company said it would not make the payments despite being given 30-day grace periods to meet both obligations.”

Also on Tuesday, Abu Dhabi-based Goldilocks Investment filed a lawsuit against the company, executives and its founder, Richard Elman. The writ of summons alleged that the trader had inflated profits to raise money, Bloomberg reported.

The Singapore-listed Noble Group had struck a deal with creditors to restructure $3.5 billion of its debt in exchange for 70 percent of the firm in January. However, this deal was met with opposition by some bondholders and shareholders, including Goldilocks Investment which has an 8.1 percent stake in the company.

In an SGX filing on Wednesday, Noble said it would vigorously defend the lawsuit. Goldilocks didn’t immediately return Shenton Wire’s emailed request for comment.

Elman, founder and top shareholder of Noble Group, officially resigned as a non-executive director on Tuesday; he had been named in the Goldilocks lawsuit.

Noble’s market value has fallen to just $114 million from $6 billion in February 2015, as the company reported record losses and shrunk its business, Reuters reported. Shares of the company were down 4.0 percent at S$0.096 at 11:20 A.M. SGT on Friday. That’s after starting the year at around S$0.20 a share; it was trading at over S$11.00 a share around mid-2014.

On Thursday, Noble requested a trading halt for several hours while it responded to queries about the bond default. In a filing on Thursday, Noble noted that an ad hoc group of around half of its creditors had entered a “restructuring support agreement,” which meant they wouldn’t pursue legal action or payment over the amounts due. Noble said it expected more of its creditors would sign on to the agreement.

But it added: “While it does remain open for 2018 noteholders who have not signed the RSA to try to take action against the company, the board has been advised that it would be very difficult to successfully wind up the company, which is the only realistic remedy available to such a holder.”

More rumblings may be afoot, however. On Friday, Noble told SGX in a filing that Indonesian coal producer Atlas Resources filed a lawsuit in Indonesia seeking compensation of at least US$260 million. Noble added that it hadn’t yet received any writ on the claim and it wasn’t aware of the grounds or details, but that it would defend it vigorously.